BILL ANALYSIS                                                                                                                                                                                                    




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                           2058 (Block)
          
          Hearing Date:  8/12/2010        Amended: 6/21/2010
          Consultant:  Bob Franzoia       Policy Vote: L&IR 4-1
          _________________________________________________________________ 
          ____
          BILL SUMMARY:  AB 2058 would establish the California Training  
          Benefits (CTB) Program within the Employment Development  
          Department (department) and revise eligibility requirements for  
          unemployment compensation benefits to specify that a person who  
          qualifies for such benefits, extended duration benefits, or  
          federal-state extended benefits or any federally funded  
          unemployment compensation benefits shall be deemed to  
          automatically be eligible for the program during a period of  
          training or retraining.  This bill would require that a  
          determination of eligibility for training or retraining be  
          issued to a person if any of specified conditions apply.  This  
          bill would require that, if training or retraining is not  
          authorized under provisions governing automatic eligibility for  
          those benefits, a determination of potential eligibility for  
          benefits be issued to the person if the department finds that  
          specified criteria apply.  Because this bill would make various  
          changes to existing eligibility requirements for training and  
          retraining benefits, which would result in additional amounts  
          being payable from the Unemployment Fund for those benefits,  
          this bill would make an appropriation.  The bill would require  
          the department to prepare a report and make specified  
          information available online.
          _________________________________________________________________ 
          ____
                            Fiscal Impact (in thousands)

           Major Provisions         2010-11      2011-12       2012-13     Fund
           Increase of training   Up to $4,000*          Up to $8,000Up to  
          $8,000                 Special**
          benefits eligibility                                    

          EDD administration                   Unknown, likely significant  
          administrative   Special***     
                                           savings annually

          * Average cost for each additional 1,000 persons, who would  
          otherwise not be eligible under current law, to continue  










          receiving unemployment insurance benefits while engaging in a  
          training or retraining program.  At the average weekly benefit  
          ($304), the maximum cost to the Unemployment Fund could be  
          $7,904,000 (1,000 new applications x 26 weeks maximum x $304)  
          annually.  When a claimant completes training before the 26 week  
          limit the benefits terminate.
          ** Unemployment Fund 
          *** Unemployment Administration Fund
          _________________________________________________________________ 
          ____

          STAFF COMMENTS: SUSPENSE FILE.

          Unemployment insurance (UI) is a federal-state program that  
          provides weekly payments to eligible persons who lose their jobs  
          through no fault of their own.  The UI program is 
          financed by employers who pay unemployment taxes on the first  
          $7,000 in wages paid 

          Page 2
          AB 2058 (Block)

          to each employee in a calendar year.  The benefits range from  
          $40 to $450 per week depending upon earnings during a 12 month  
          base period.  Under current law, a person must be approved for  
          training before training benefits are paid from the Unemployment  
          Fund, a continuously appropriated fund.

          Under this bill, a person would be eligible for additional UI  
          benefits.  The cost to the Unemployment Fund would be for those  
          additional UI payments for training that would otherwise not be  
          approved under current law.  Under current law, a person has to  
          apply to the department for a determination of eligibility for  
          UI benefits while receiving training.  Under this bill, a person  
          may automatically be eligible for the UI benefits. 

          The department notes several variables that make it difficult to  
          estimate who might be eligible for these benefits and for how  
          long.  For example, this bill would provide eligibility for  
          persons who select a training provider from the state Eligible  
          Training Provider List.  Many persons who are currently approved  
          for CTB benefits authorized by the Workforce Investment Act  
          (WIA) are in training with providers on that list.  This bill  
          would provide the same approval for persons who arrange their  
          own training using that list, but do not go through the WIA.











          In 2009, there were over 3.8 million claims filed for UI  
          benefits and a total of 2.5 million eligibility determinations  
          conducted.  Of those determinations, 64,209 (2.5 percent) were  
          for the CTB program.  The department found 20,366 persons  
          eligible to participate in the CTB program or less than  
          two-tenths of one percent of the total UI claims filed.

          While 43,843 persons were found ineligible to participate in the  
          CTB program, many of these persons may have received UI benefits  
          because their training did not prevent them from accepting  
          full-time work and they continued to seek work.  The number of  
          persons whose training actually led to a denial of UI benefits  
          is unknown, but most likely it is a relatively small number when  
          compared to the total number of persons who filed a claim and  
          received benefits.  Furthermore, many persons who would be  
          denied benefits may opt to drop training in order to retain  
          benefits as their only financial safety net.

          This bill's impact to the UI program would likely be limited to  
          a small sub-set of claimants that includes those who were denied  
          CTB participation under current law and those who would not meet  
          the UI program's requirements for being available for work and  
          seeking work.   It is this sub-set of claimants who were denied  
          to participate in the CTB program and did not meet the other  
          eligibility requirements that may benefit from this bill.